Mr Osborne delivered his Budget to a rowdy House of Commons in which the deputy speaker was forced to intervene repeatedly and some MPs apparently clutched the front page of London’s Evening Standard, which had helpfully been supplied with full details of the Budget in advance.

Mr Osborne said the economy would grow by just 0.6% this year - down from the previous forecast of 1.2% - and would be slower than forecast next year at 1.8% compared to the 2% forecast at the time of the Autumn Statement.

The sluggish growth figures mean borrowing will be higher than expected - hitting £114 billion this year compared to a previous forecast of £108 billion.

Next year borrowing will be £108 billion as against the £99 billion previously predicted, before dropping down to £42 billion in 2017-18 compared to £31 billion forecast in the Autumn Statement.

But the Chancellor predicted the deficit would continue to come down thanks to the “many tough decisions” taken by the Government.

He said the deficit had fallen from 11.2% of GDP in 2009-10, to a forecast of 7.4% this year - a fall of a third.

And he predicted it would fall further to 6.8% next year, 5.9% in 2014-15, 5% in 2015-16 and 3.4% the following year - reaching 2.2% by 2017-18.

He confirmed that the remit of the Bank of England’s Monetary Policy Committee would be updated to allow it to use “unconventional monetary instruments” to support the economy while keeping inflation stable.

He confirmed that Whitehall budgets would be cut by 1% after a £11 billion underspend this year, with protection for schools and health.

Money saved will be pumped into infrastructure projects, he said.

George Osbourne delivers his budget to the House of Commons

And he said the public sector pay cap of 1% would be extended by one year in 2015/16.

But military personnel would receive their full recommended increase in May.

On energy, the Chancellor announced a boost for the controversial shale gas industry, which collects gas using a process known as fracking.

Mr Osborne said the “generous new tax regime” would include a shale gas field allowance.

He said: “Shale gas is part of the future. And we will make it happen.”

Declaring “Britain is open for business”, the Chancellor announced a series of measures designed to boost commerce, including a 1% cut in corporation tax to 20% in April 2015.

And he confirmed more measures aimed at curbing tax dodging, claiming it was “one of the largest ever packages of tax avoidance and evasion measures presented at a Budget”.